The Head of Agriculture Finance, Stanbic IBTC Bank, Jerry Gushop, has said that efforts by the Federal Government to structurally transform the Nigerian economy would yield immediate results if the value chain development model, including value chain financing, is adopted in the agricultural sector.
Gushop made this remark during his presentation at the 2015 AgrikExpo held in Lagos recently. In the presentation, which looked at the role of commercial banks in agriculture value chain finance, the bank chief said that agriculture represented an opportunity sector whose huge economic potential remain largely untapped.
He explained that value chain development/ financing had almost become a magic formula for sustainable agricultural investments, adding that it was a whole range of activities and services required to bring a product or service from idea or input stage to the market.
According to him, the value chain model becomes necessary because it could quickly block the production and financing gap in the industry while unlocking its potential by targeting the whole range of activities in the sector.
He identified the twin problems of low agriculture productivity and paucity of required affordable financing that continued to limit to 22 per cent the sector’s contribution to the country’s GDP.
Gushop clarified: “It is because of the interdependence and linkages between the activities that a clear understanding of the chain, market for the final product and the various actors of the chain is important, not only for financing or investment decisions, but for developing the entire chain.
“It helps identify linkages of the small players to the bigger economic system, so that in the end, even the small and marginalized participants also benefit. Value chain financing helps to identify where financing needs are, the different types of financing required and ways to improve access to financing”, he added.
He said that there must be a synergy between the public and the private sectors to ensure success of the model, while assuring that the bank has developed a robust financing model that captured the various actors in the value chain, including small holder and commercial farmers.
The finance expert pointed out that the bank’s robust financing models hinged on a single over arching agric strategy of Business Bank/CIB alignment through two legs of execution to enable it capture and bank the value chain opportunities, adding that some of targeted products/services by the bank included working capital facility for commodity processing and production; loans for acquisition of agriculture fixed assets and construction of warehouses and storage facilities; amongst others.
Gushop expressed the hope that the model would help correct the current situation whereby about 90 per cent of the agric output in the country is accounted for by small holder farmers with less than two hectares under cropping